Virginia Company will pay $343,000 to settle Medicare fraud claim

On Tuesday, July 22, 2014, a federal judge in Pittsburgh approved a settlement in which a Virginia-based medical research firm will pay $343,000 to the U.S. to settle claims that it defrauded the government by improperly marketing genetic tests to patients at a Green County medical office.

The Justice Department asserts that American International Biotechnology (“AIB”) and a former contract sales agent, Jason Hoover, violated the federal False Claims Act by improperly obtaining referrals for genetic tests and billing to Medicare. Mr. Hoover was also accused of offering kickbacks of $50 per patient to a nurse at Lions Medical Center, a facility operated by Greentree Medical Center, located in Rices Landing, PA.

Greentree Medical Center initially raised the federal suit that was later joined by the Justice Department. In the complaint, filed in April 2013, Greentree and the U.S. asserted that Mr. Hoover devised the scheme starting in 2012. Mr. Hoover regularly visited Lions Medical to assess cardiac equipment, thereby obtaining patient insurance information. Mr. Hoover established exclusive contact with a registered nurse named Matt Burkett after meeting at a dinner to pitch AIB’s genetic tests. Under the guise that the genetic tests would be part of a free clinical trial, Mr. Hoover asked Mr. Burkett to simply swab each patient’s cheek and submit an order with the patient’s signature. According to the complaint, Mr. Hoover initially offered a $50 kickback for the nurse’s help. Mr. Burkett declined the bribe, but asked who specifically should be swabbed. Mr. Hoover instructed Mr. Burkett to swab “everyone who comes through the door.” Believing the testing was free and part of a research project, Mr. Burkett obtained patient consent and swabbed the patients’ cheeks. Mr. Hoover then completed the blank form and submitted the forms to the insurance companies, including Medicare. In some cases, Medicare paid as much as $4000 per patient for this unwanted testing. On numerous occasions Greentree asked AIB to stop billing, to no avail.

AIB asserts that they were unaware such activities occurred and put the blame solely on Mr. Hoover’s shoulders. “[AIB] had no knowledge of the alleged actions of the contract sales agent, and only learned of the action on receipt of the complaint; it did not approve or sanctions the actions of the sales agent.” AIB chose to settle the case rather that litigate to “avoid the delay; uncertainty, inconvenience and expense.”